China’s economy grew by 7.6 per cent in the second quarter of the year according to official figures released on Friday, marking a three-year low and confirming expectations of a slowdown that may prompt new stimulus measures in coming months.
Growth fell from 8.1 per cent in the first quarter of 2012, hit by the continuing economic troubles in the West and a cooling real estate sector at home following recent tightening measures.
Friday’s growth figure matched the consensus estimate put forward by economists this past week. The second quarter numbers were being closely watched as an indicator of whether China’s slowdown had been worse than previously expected, with some analysts even expressing fears that growth would fall below the widely estimated 7.6 per cent figure.
China’s economy has grown 7.8 per cent in the first half of the year, on track to meet the government’s 7.5 per cent target. Releasing the figures in Beijing on Friday morning, Sheng Laiyun, spokesperson of the National Bureau of Statistics (NBS), said the numbers reflected “steady growth” that should dispel concerns.
“This has been the second time we have seen the GDP growth rate fall below 8 per cent in the past three years,” he told reporters. “Therefore, people are worried about China’s economic development.”
“If we think from a reasonable and rational perspective of the domestic and external situation," he added, “then in the first half China’s economy has maintained stable growth. If I had to use on sentence to summarise the dominant feature in the first half, I would say the economy has maintained steady growth. The growth rate is still higher than 7.5 per cent set target in the beginning of this year.”
He attributed the slowing down to “falling external demand”, particularly on account of the troubles in the West, and also to the cooling real estate market at home following “continued regulatory measures.”
According to the Friday's figures, industrial value-added output increased 10.5 per cent year on year in the first half of the year. Total fixed asset investment grew 20.4 per cent in the first half, while retail sales of social commodities increased 14 per cent.
Earlier this week, Premier Wen Jiabao described stabilising economic growth as “the most pressing matter currently facing China”. In a meeting with representatives from companies and think-tanks, he said the government would put in place policies and measures to promote investment, boost consumption and diversify exports, responding to increasing concerns about the slowing down economy.
Despite the slowing down, Mr. Sheng of the NBS said there were positives from the May and June data that would suggest a possible rebound in the second half of the year. The three driving forces — fixed asset investment, domestic consumption and exports — had all shown a strong performance, he said.
Fixed asset investment in newly-started projects increased 23.2 per cent in the first half of this year. Retail sales — which grew 13.7 percent in June, down from 13.8 percent in May — were also stable, he noted, adding that the government would "adopt new measures to encourage consumption”.
On the export front, the government was working to diversify exports, he said, pointing out that while exports to European countries had dropped 0.8 per cent, those to emerging markets had maintained a growth rate of 15 per cent.
Chinese officials have, in recent weeks, ruled out any major stimulus measure for the slowing down economy, such as the 4 trillion yuan 2008 package. Mr. Sheng and other officials have stressed that lower growth was in keeping with the 7 per cent annual target laid out by the
Twelfth Five-Year Plan (2011-15). The plan has emphasised more balanced and sustainable growth, and a gradual shift away from the export-led and investment-driven model to consumption-driven growth.
Mr. Sheng said lower growth was “conducive to accelerate the shift in the development pattern and to improve efficiency of resource allocation and phase out outdated production capacity”.
“After more than 30 years of vigorous growth,” he said, “China’s economy has entered a period of transition. And in this period, the growth rate will have to drop.”